Q1 earnings focus of US large-cap banks to be on outlook not results - MS

SEI Investments

05/04/2023 13:35

** Q1 earnings focus of U.S. large-cap banks will be on the
outlook rather than results, says Morgan Stanley
    ** MS estimates 2023 and 2024 EPS median range of U.S.
large-caps under its coverage universe to decline 4% and 15%,
respectively
    ** "We expect industry reaction to the failures of
SIVB/SBNY/SI will be an accelerating bid for consumer deposits,
which will weigh on NIMs (net interest margins)" - MS
    ** Brokerage also sees tighter lending standards, which
should drive up net charge-offs as borrowers have increasing
difficulty refinancing loans or accessing new loans
    ** JPMorgan Chase  JPM.N , Wells Fargo  WFC.N  and Regions
Financial  RF.N  are the most preferred banks under brokerage's
coverage universe going into April earnings
    ** For JPM, MS expects positive operating leverage in FY23,
a significant inflection from last two years
    ** WFC's capital position stands out among its peers, as the
economic backdrop turns more uncertain, says MS
    ** Brokerage expects RF'S deposit base value will be a key
driver of net interest income (NII) performance this year.
    ** S&P 500 Bank index  .SPXBK  down ~15% so far this year
    ** MS lowers PT of the following banks:
    
    
 Company Name            New PT      Old PT
 JPMorgan Chase & Co     $153        $173
 Regions Financial       $25         $30
 Wells Fargo             $47         $58
 Goldman Sachs           $329        $332
 Bank of America         $31         $37
 U.S. Bancorp            $46         $56
 Truist Financial Corp   $42         $56
 PNC Financial Services  $137        $163
 

 (Reporting by Siddarth S in Bengaluru)
 ((Siddarth.s@thomsonreuters.com;))